Existing Home Sales Fall In June

A setback in what appears to be a housing recovery

The residential real estate market suffered a setback in June as sales of previously-owned homes fell 5.4 percent from May, interrupting a series of mostly positive reports from the housing front.

But the National Association of Realtors (NAR) suggests the news is not is bad as it might seem. NAR chief economist Lawrence Yun points out that June's sales were up 4.5 percent over June 2011. And he suggests that sales declined last month because there just weren't enough homes for sale.

"Despite the frictions related to obtaining mortgages, buyer interest remains solid," Yun said. But inventory continues to shrink and that is limiting buying opportunities."

And with a smaller supply of homes for sale, Yun says that is pushing up home prices in many markets.

"The price improvement also results from fewer distressed homes in the sales mix," he said.

Prices rise 7.9 percent

The national median existing-home price for all housing types was $189,400 in June, up 7.9 percent from a year ago. This marks four back-to-back monthly price increases from a year earlier, which last occurred in February to May of 2006, at the height of the housing bubble. June's gain was the strongest since February 2006 when the median price rose 8.7 percent from a year prior.

Another positive sign, says Yun, is distressed homes -- foreclosures and short sales sold at deep discounts -- accounted for 25 percent of June sales, unchanged from May but down from 30 percent in June 2011. Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent.

"The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling," said Yun.

Despite record low mortgage rates, all-cash sales accounted for 29 percent of all sales in June, rising slightly from May. Investors, who account for most of the all-cash sales, were more active buyers in June, purchasing 19 percent of the homes -- up two percent from May.

Yun once again blamed tight lending standards for keeping many first-time buyers on the sidelines.

Story provided by ConsumerAffairs.
Consumer Affairs

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